Marvell Technology Inc. (Marvell Technology (MRVL)) stock is having a moment on Wednesday, surging after a high-profile endorsement from Nvidia's CEO and some timely analyst commentary. The shares were up nearly 10% in premarket trading, hitting a new 52-week high.
The catalyst? A one-two punch of market-moving news. First, investor Gary Black pointed out that custom chipmakers are becoming the darlings of Wall Street as the AI boom shifts from general-purpose chips to specialized hardware. On Tuesday, Black said that Broadcom Inc. (Broadcom (AVGO)) and Marvell "seem to be the big winners in Wall Street's new appreciation for custom AI chips." He was referring to application-specific integrated circuits (ASICs), which are tailor-made for the massive computing loads that AI models require.
Then came the real fireworks. At the Computex trade show in Taipei, Nvidia Corp. (Nvidia (NVDA)) CEO Jensen Huang shared a stage with Marvell CEO Matt Murphy. Huang turned to the crowd and said, "The next trillion-dollar company, ladies and gentlemen." That's the kind of endorsement that moves markets.
Huang went on to explain why Marvell is so critical to the future of AI infrastructure. He noted that the bottlenecks in AI are shifting from raw compute power to data movement. "When you take a computing challenge, and you break it down into numerous components, distributing it throughout the entire data center, connectivity becomes crucial," Huang said. "This is why Matt is performing so well, and why Marvell is so vital."
Marvell's business is deeply tied to data centers, which account for about 76% of its revenue. The company is focused on solving the connectivity problem with optical interconnects, silicon photonics, and custom ASICs. Just recently, Marvell introduced its Teralynx T100 switch, which is designed to cut power consumption by up to 25% for cloud data centers. That's a big deal in a world where energy costs are a growing concern for hyperscalers.
The stock's rally also has a fundamental tailwind. On May 27, Marvell reported quarterly earnings of $0.80 per share, beating the analyst consensus of $0.79. Revenue came in at $2.42 billion, slightly above the $2.40 billion estimate. The company's strong performance in data center infrastructure is clearly resonating with investors.
As of Wednesday's premarket, Marvell shares were up 9.85% at $319.43, trading at a new 52-week high. With Huang's trillion-dollar prediction echoing in traders' ears, it's easy to see why the market is betting big on custom AI chips.
